Signing a commercial lease is a big step—especially in India, where missteps can mean costly disputes or legal headaches. Whether you’re opening an office, shop, or warehouse, doing the right lease agreement checks India ensures your business starts smoothly. This guide highlights the top five commercial rent dos—from title verification to lease clauses.
1. Confirm Title & Legal Ownership
Before anything else, make sure the landlord actually owns the property they’re leasing:
- Title Deed Verification: Examine sale deeds to ensure clear title—check for unsettled dues or encumbrances.
- Encumbrance Certificate (EC): Request a recent EC from the sub-registrar to confirm there’s no mortgage or lien on the property.
- Power of Attorney (POA): If the person signing lease lacks ownership, confirm a valid POA empowers them to lease the property .
- Occupancy & Building Plan: Ensure the Occupancy Certificate (OC) and sanctioned building plans allow for commercial use.
Real-life tip: At a Pune office lease, the tenant uncovered a hidden loan against the landlord, delaying the process by weeks—could have been worse without legal checks.
2. Scrutinize Lease Terms & Clauses
Your lease agreement’s wording matters—a lot.
- Lease Term & Renewal
- Clarify the lease duration and renewal terms—avoid auto-renewal traps.
- Understand any exit penalties for ending early, and the required notice period .
- Clarify the lease duration and renewal terms—avoid auto-renewal traps.
- Rent, Escalations & Deposits
- Confirm exact monthly rent, payment dates, and concerns like GST or service charges.
- Look for rent escalation clauses and understand the agreed increment rate.
- Ensure clear definitions for security deposit amounts, deductions allowed, and refund timelines .
- Confirm exact monthly rent, payment dates, and concerns like GST or service charges.
- Permitted Use & Restrictions
- Lease should specify what business activities are permitted—no hidden surprises about use restrictions.
- Include any exclusivity clause—preventing landlord from leasing nearby to your direct competitor.
- Lease should specify what business activities are permitted—no hidden surprises about use restrictions.
- Maintenance & Repairs Responsibility
- Clarify who’s responsible for repairs and CAM (common area maintenance) charges .
- Know what service charges include: electricity, housekeeping, building security—get breakdowns to budget properly.
- Clarify who’s responsible for repairs and CAM (common area maintenance) charges .
3. Inspect Property Condition & Fit-Out Permissions
Look past the glossy brochure—visit and evaluate:
- Physical Condition & Survey
- Check for cracks, damp patches, functional wiring, plumbing, lifts. Ask for a professional survey if needed.
- Make fixing issues part of the lease if they exist—landlord should resolve before possession.
- Check for cracks, damp patches, functional wiring, plumbing, lifts. Ask for a professional survey if needed.
- Fit-Out Permissions
- Get clauses that specify allowed interior changes—false ceilings, partition walls, branding signage, and décor changes .
- Negotiate for landlord’s support or cost-sharing on major renovations .
- Get clauses that specify allowed interior changes—false ceilings, partition walls, branding signage, and décor changes .
4. Check Regulatory & Tax Compliance
Avoid hidden liabilities by ensuring legal backups:
- Lease Registration & Stamp Duty
- Leases over 12 months must be registered and stamped—a requirement in all states.
- States like Uttar Pradesh now cap registration charges, but check your state’s rules.
- Leases over 12 months must be registered and stamped—a requirement in all states.
- Income Tax & TDS
- Check if landlord is registered for GST; tenants may need to deduct TDS on rent over ₹2.4 Lpa, or risk penalties.
- Check if landlord is registered for GST; tenants may need to deduct TDS on rent over ₹2.4 Lpa, or risk penalties.
- Commercial Classification & Permits
- Confirm municipal classification as commercial and that government approvals (like trade license or FSSAI for eateries) are in order .
- Confirm municipal classification as commercial and that government approvals (like trade license or FSSAI for eateries) are in order .
5. Confirm Exit & Dispute Resolution Terms
Think ahead to endings and disagreements:
- Termination & Exit Clauses
- Understand conditions for early exit—the notice period and any penalties.
- Try to negotiate flexibility—especially useful for growing businesses that may relocate.
- Understand conditions for early exit—the notice period and any penalties.
- Subletting & Assignment Rights
- Include terms that allow subletting or assigning the lease. This prevents trapping your business if plans change.
- Include terms that allow subletting or assigning the lease. This prevents trapping your business if plans change.
- Dispute Resolution
- Check if the lease prefers mediation or arbitration before court. Knowing this helps resolve disputes with less hassle .
- Check if the lease prefers mediation or arbitration before court. Knowing this helps resolve disputes with less hassle .
Quick Comparison Table
| Check | What to Verify | Why It Matters |
| Title/Ownership | Title deed, EC, OC, POA | Prevents fraud & legal ownership issues |
| Lease Clauses | Term, rent, escalation, deposit, use, exclusivity | Protects budget & business freedom |
| Condition & Fit-out | Physical survey, repairs, renovation rights | Ensures safe, usable, customizable space |
| Legal & Tax Compliance | Registration, GST, TDS, permits | Avoids penalties & legal troubles |
| Exit & Dispute Terms | Termination, subletting, dispute clause | Offers flexibility and smooth separation |
Local Example: Mumbai Retail Space
A retail brand leased a Bandra shop:
- Verified EC—found lien from previous owner; resolved before lease.
- Agreed split of exterior signboard costs with landlord.
- Negotiated a competitor clause to stop similar brands from moving in next door.
- Secured a 3-month exit option after year 1.
- Included arbitration clause to avoid court cases.
They launched stress-free, with exit options built in if market changes.
Final Words
When it comes to lease agreement checks India, early diligence pays off. From verifying legal ownership and lease terms to understanding regulatory compliance and exit strategies, these top five checks make sure you’re signing up for a lease that supports—not hinders—your business growth. Whether it’s a bustling Mumbai high-street or a Bengaluru co-working space, thoughtful preparation helps your commercial lease feel like a stepping stone, not a stumbling block.
Source : fulinspace.com